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He either summoned it from his hat or turned his hat into a giant crab. It and Char Sui nearly succeeded in killing Buddhist Monkey, but the creature was destroyed when Buddhist Monkey summoned fire and boiled it to death in a lake. Its death is likely permanent.
At the end of the episode, one of the crab's giant claws floats over to Panda Mom, who rejoices over the fresh crab meat she could eat (she was cooking a fish skeleton).